Community Banking System: Statements

As Minister, I am acutely conscious of the value placed by communities in both rural and urban areas on services provided by post offices and I am concerned to ensure the needs of those communities continue to be met. I believe there is enormous potential for An Post to create additional competition and increase the availability of banking facilities throughout rural Ireland.

An Post recently announced its plans for a modernised post office network, which centres around the availability of new services in a modernised, revitalised network. Such services will include a better range of Government services, financial services and e-commerce services for shoppers and small businesses. The announcement by An Post is supported by an agreement reached with the Irish Postmasters Union, IPU, executive following three months of intensive negotiations, which has subsequently been endorsed by 80% of IPU members. I want to publicly acknowledge the tremendous work done by Turlough O'Donnell, who I appointed to assist with these negotiations and to come to a conclusion, which was accepted by 80% of the membership.

The agreement represents a positive first step in reinvigorating our national post office network. It is the first agreement in regard to the revision of the post office contract since 1907, so it is far older than most Members of this or the other House and, in fact, older than the State itself. It provides for adapting the post office network to the changing environment in which it operates by providing a service that meets the needs of communities across the country, particularly in rural areas.

An Post has the largest retail network in the country and provides savings and investments, lending, payments and insurance services to retail customers. An Post already offers a significant range of financial services to customers and is now looking at extending the range of services provided. It is actively looking at what other postal services across Europe and elsewhere are doing, looking at what has worked and looking at different models that have been tried. We are already seeing a number of important new initiatives. An Post has invested in the launch of a current account in 2017, which is now available in each of its branches. The account has been well received, with an average of 100 accounts being opened on a daily basis and 25,000 customers in less than a year. It provides agency banking services for three of Ireland’s retail banks, AIB, Ulster Bank and National Irish Bank. These services are available to consumers and business. I understand discussions are ongoing with other financial institutions. In 2017 there were over 4.5 million agency banking transactions at a value of €1.5 billion.

In 2017 An Post administered more than €20 billion of State savings for the National Treasury Management Agency.

State savings are estimated to be 16.5% of national household deposits. At the end of 2017, over 480,000 customers held fixed-rate savings products and over 1.2 million customers have a post office savings bank account.

An Post had sales worth over €300 million in the provision of foreign exchange services in both 2016 and 2017. A further five currencies are being added in 2018, which will also see an enhanced online presence and a mobile app developed. The intention over the coming weeks is to extend the foreign exchange cash provision. An Post offers bill payment services for over 100 companies, including Electric Ireland and Bord Gáis, with over 1.6 million bills processed through the network in 2017. Post Insurance employs over 160 staff and has over 160,000 policy holders. Through its network, An Post has already established relationships with local small and medium enterprises, for whom it provides cash services. Over €275 million was lodged by local businesses in 2017. It is clear that An Post is already providing a significant range of financial services to over 1.7 million customers across its network and online channels. It will continue to add new products and evaluate new propositions through partnership models.

In so far as the Kiwibank model is concerned, A Programme for a Partnership Government envisaged that An Post, the Irish League of Credit Unions and other interested stakeholders would be asked to investigate and propose a new model of community banking, such as the Kiwibank model in New Zealand. The programme for Government also includes a commitment to investigate the German Sparkassen model for the development of local public banks. A project team comprising officials from the Department of Rural and Community Development and the Department of Finance was established to progress this commitment. The project team carried out detailed research into the concept of a public banking model.

In addition, a public consultation process seeking views on the concept of a community banking model ran for four weeks. A total of 16 replies from a range of stakeholders were received. As part of their research, officials from both Departments met representatives from the Savings Banks Foundation for International Co-operation and Irish Rural Link. These organisations put forward a proposal as to how a local public bank, based on the Sparkassen model, could work in Ireland. The Department officials have now finalised their report and have submitted their findings. The report has been submitted to the Government for consideration and will be published in due course.

Turning to State services, the Government is actively working on further opportunities for government business through the post office network, particularly the payment of motor tax. Government policy is to offer government services online but there is always likely to be a segment of the population that is not comfortable or proficient in accessing online tools or services. One in seven people in Ireland has never used the Internet. The post office network is the obvious choice as the "offline gateway" for citizens with its nationwide network and existing strong relationship with offline citizens. I have asked my officials to actively engage with An Post, the Office of Government Procurement, the Office of the Government Chief Information Officer and other Departments to assess how additional State business might be channelled through the post office network. I know discussions have been positive and I hope to be in a position shortly to expand on some measures under consideration.

My colleagues, the Minister of State, Deputy Kyne, the Minister for Rural and Community Development, Deputy Michael Ring, and the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty, and I are committed to ensuring more government services are channelled into the local post office network. We are determined but also cognisant of the need to adhere to public procurement procedures. The first practical step that the Government is taking is the digital assist pilot programme. Under that programme, post offices will provide access to a wide range of government services. Government funding of €80,000 has been secured for the roll-out of a pilot digital assist scheme to ten post offices, which will be equipped to help citizens with online government interactions. The ten pilot schemes will be located in rural post offices and will be in place later this year.

A pilot e-Local service was launched by An Post last year in three districts, Bantry, Mullingar and Ennis. This service combines the strengths of online commerce with that of An Post mails network for the benefit of local business. It gives local business an edge over national and international online operators by connecting retailers with their customers both online and in person. A key feature of the eLocal.ie service is that An Post will give each retailer an online presence, displaying their goods and services, and enabling online orders. This ensures any business in the three towns can guarantee next-morning delivery through the local post van to any home within the mail district. Based on the development of these three locations, the intention is to expand the service across the country. This will ensure that more of the €14,000 per minute currently spent online by Irish customers will be spent on goods in this country. Currently, €10,000 of the €14,000 per minute spent is spent on goods and services outside this country. I want to see a greater proportion spent on goods and services in this country, particularly in provincial towns. The eLocal.ie service facilitates that.

The affiliation with the Department of Employment Affairs and Social Protection remains a significant feature for the future of the post office network. In April the Minister for Employment Affairs and Social Protection renewed her Department’s contract with An Post to provide pensions, child benefit and other social welfare payments in cash at post offices. Last year's contract amounted to €51 million for 33.6 million payments, and the value of the 2018 contract is expected to match that. This reaffirms the Government's policy that sees the post office network as a key piece of the country’s financial and social infrastructure, particularly in rural areas. Accordingly, A Programme for a Partnership Government commits to actively encourage payment at post offices. All avenues are being explored to ensure services available through the post office network are enhanced in order that we have a strong, sustainable customer-focused network. I look forward to hearing your views and suggestions on this important matter.

I thank the Minister for being present for this debate on postal services and particularly local post offices, which are very close to all our hearts. As a former Minister of State at the Department of Posts and Telegraphs in 1982, I had a very close relationship with the postmasters' union and the post office system. Since that time, unfortunately, too many post offices have closed. In County Roscommon alone, post offices have closed in Kilteevan, Dunamon and Ballymurray. I could go through a list, which is unfortunate.

The agreement reached between the postmasters' union and the Department is welcome. If there is a very attractive deal, I want to ensure postmasters do not take it on themselves to close a possibly viable office in a rural area on the basis of the agreement. An Post should ensure the office structure would be retained. It is a danger with agreements like this, although I welcome that the agreement has been made. I know the Minister is making great efforts to enhance the role of viable local post offices and the location of offices. Nevertheless there are circumstances where a postmaster might decide for his or her own reasons to avail of this attractive package, although it might not be in the best interests of the area the branch serves.

It must be possible for An Post to refuse to agree to a request from a postmaster or postmistress to close a viable office. Technology has allowed Seamus Boland and Sinead Dooley from Irish Rural Link to tune into this debate. I commend the Houses of the Oireachtas on having a facility to broadcast debates live on the Oireachtas network. Irish Rural Link has made a good submission. I understand the Minister is responding well to its proposal to offer a banking structure in local post offices.

There is great trust in the post office. It is a guaranteed system. It has reached a stage where many people with small savings will literally have to pay for the banks to retain and secure their money. The current interest rate on savings is about 0.25%, although I understand An Post offers a better deal. In the past, the post office service encouraged young people to save. It may not go through the same process used in the past when, under a stamp system, a stamp was issued and a person built up savings. I encourage young people to save. The school system should encourage them to get into the saving habit. The best way to save is through their local post office because people will get a welcome from the postmistress or postmaster, whereas banks are nearly all automated and customers have little contact with staff at the front desk. Sometimes I wonder if I am being charged for discussing my accounts at the front desk.

I also welcome the decision of the Minister for Employment Affairs and Social Protection to renew the contract with An Post. The previous Government had a tendency to encourage people to have direct transfer of their pensions to commercial banks. I could never understand this and I am delighted the Minister for Communications, Climate Action and Environment and his colleagues have grasped this issue. As the Minister stated, the contract has been renewed.

In respect of the pilot scheme that is being launched, the Minister made the point that one in seven people does not have access to the Internet. He knows from being a Deputy for Roscommon-Galway-----

That may be because they do not have access to or knowledge of it. It takes a long time. Young people are highly proficient in this regard. As a Deputy representing Roscommon-Galway, the Minister knows there are many farmers who are required to submit applications online. Doing so is a daunting task. The service is available at a cost. It involves being prepared to pay because sending forms properly elicits a quicker response with regard to the grants that are available. There is a great deal of bureaucracy in the Department of Agriculture, Food and the Marine. Local postmistresses and postmasters could provide that service and I recommend that the Minister roll it out to all post offices as quickly as possible.

Regarding savings, I remember making a point to the late Brian Lenihan when he was Minister for Finance during a terrible crisis. He was a courageous man who was unbelievably dedicated to the State and we all owe him a great debt of service. He was standing where the Minister is seated and it was very difficult for him. I made a point about the national reconstruction fund, which I believe was in place, although I am not sure. I often wonder about what kind of return it is getting. There is an enormous amount of money in the country, some of which could be put into a savings account in An Post for a national reconstruction plan, particularly for housing. The State could draw down this money from people who have savings and can invest for a period of four or five years without accessing their savings. The more that these types of services are provided by An Post and the local post office service, the better it will be because from personal experience, I believe there is enormous trust in the excellent and completely confidential service being provided by postmasters and postmistresses. From my time in the Department when I approved many applications for post offices, I know positions in post offices were much sought after and, to be honest, political appointments were made in post offices throughout the countryside.

The Minister has a good memory. Unfortunately, the Land Commission has gone as well. The post office was very tightly fought over in different areas. It was always the responsibility of the Minister of the day to make appointments. I am sorry to see a major post office in Castlerea go into the private sector. It is doing a good job so I am not knocking it and I wish the people who got it well. The Minister is moving in the right direction and I commend him on what he is doing. He has grasped the issue very well. The postal area is developing and expanding with developments in packaging and Amazon. We have a tremendous postal service. People can receive next day delivery practically everywhere in Ireland.

I thank the Leader for facilitating my request to have the Minister come to the House and thank the Minister for taking the time to do so. I appreciate it. The big question is where lies An Post, the country's national treasure? Does it envisage becoming a full service bank like Kiwibank in New Zealand or the Sparkassen in Germany or does it plan further co-operation with the pillar banks? That is my main question this afternoon.

An internal memorandum from the retail marketing manager of An Post - I will not name the person who wrote it because she needs to go to language and linguistics classes - states that from 24 May, An Post will kick off a campaign to promote banking services at the post office and that the recipients of the memorandum will find enclosed a show card for display in their post offices. The memorandum states that this formed part of a larger focus to promote banking services at the post office to help bring new customers to the post office. An Post is "kicking off" - that is the level of communication. A banking service, involving AIB, Ulster Bank and Danske Bank, is what is kicking off in the post office. We are handing the post office network over to AIB, Ulster Bank and Danske Bank and closing 390 post offices at the same time. Let me remind the House about AIB. According to Mr. Bernard Byrne, the chief executive of AIB, management is creating a customer-centric, sustainable bank with a sustainable margin that will, in time, see it fully repay the State's €21 billion. He is referring to a capital injection of €21,000 million over a five to ten-year timeframe. That is great. These billions were lent to AIB in 2008 by me, you, all the other Senators and taxpayers. AIB, which is to become part of An Post, is already ten years in arrears with another eight to go, or 18 years in total. It is one law for the banks and another law for me. Given that AIB is 99% owned by the State, this defies logic. The State wants the bank to be customer-centric in post offices and make bellboys of the post offices with a harp over the door. That is my opinion.

The chief executive of AIB has a salary of €500,000 and two former AIB executives have been handed prison sentences. So far, we have only got back €10 billion of the €21 billion we pumped into the bank. In 2012, AIB cut 2,500 jobs and its soured loans peaked at €29 billion in 2013. In 2014, the bank came looking for bonuses, while in 2016, it fared among the worst in European Union banking stress tests. In the same year, it emerged that 3,000 customers had been wrongly denied a tracker mortgage rate over the previous decade.

In 2017, AIB paid the State €280 million of the €20 billion it owes us. AIB remains the lender most likely to sue its customers in the High Court. AIB applied for debt summary judgments, where the bank seeks an immediate court ruling against a borrower without a trial and gaining recourse to any and all of the borrowers assets, on 755 occasions according to the 2017 court records. It is now at the counters in An Post. That is great.

Here are some facts about Ulster Bank. It is repaying €15 billion to its parent company, Royal Bank of Scotland, and we know about Royal Bank of Scotland and the fines it has had to pay. This is owed to the British and Irish taxpayers, where we put the money in North and South of the Border. We never learned what the split was, but the Republic is thought to have been responsible for two thirds of the billions. It now stands as a loan entity. The chief executive officer left and he now works for Paddy Power. That is great.

Ten years ago this month, our national debt was €39 billion; today, it is €200 billion. These are the banks that the Government wants An Post to deal with. It wants An Post to publicly subsidise our commercial banks. Are the commercial banks the real force pushing the flawed three-year deals at An Post, capturing a national asset for failed banks in order that they can overprice and profit? A similar deal was done in the UK with Bank of Ireland, and Bank of Ireland takes huge profits from the post office network there. It will cost UK taxpayers £2 billion to get rid of the bank. They cannot get rid of it even though they want to do so because it takes all the profits.

I appreciate everything the Minister has done and said, but pages two and three of his speech are full of waffle and obfuscation. Why have we not tried out the New Zealand Kiwibank model? The Minister said that we have done so, that we have stakeholders and that we are looking at reports, but in the middle of this, AIB and Ulster Bank are moving in. The head of retail banking has told us this. They are moving in on all the post offices. Why have we not piloted this model? What is the delay with the pilot? It is a phenomenal success and I do not have to go into the Kiwibank. Its profit over three years has been phenomenal. It is for the people. It has captured 20% of the market, and, therefore, 20% of New Zealand banking is in public hands. In Ireland, 95% of banking is commercial, which is disgraceful. In Germany, which has the Sparkassen model, only 12% of banking is commercial and 70% is community-based providing loans with an interest rate of 1.1%. The model is the backbone of the German economy and it is the fourth largest in the world. Will Ireland even to try to copy that model and not let the other banks that beggared every one of us in the door? I will not put my money anywhere near the counter of a post office if I see the big fat, greedy, profiteering names of AIB and Ulster Bank on the counter.

Commercial banks in Ireland control our markets and our lives and they are predatory. The Minister has known for years that the post office network required investment and creative thinking, and the Government has failed. We have no State or community banks. AIB, Ulster Bank and Danske Bank will not become community banks, while Germany has 1,400 of them.

If I were working in the post office, I would start a strike to get those profiteering banks out the door and to adopt the models I have discussed across the country. It only takes creative and imaginative thought to do it and to get on with it. We seem to be lazy about it. Where is the motion on this that was presented to the Dáil that 158 Dáil Deputies signed? Where is the submission of Irish Rural Link, which was mentioned, that relates to the Sparkassen public bank foundation in Germany. What about the Grant Thornton report, which discussed the financial issues and the decline in the post office network and the €60 million needed for the processing of social welfare payments which was ignored?

The Minister has sidetracked opportunities on motor tax, proper community banking, payment of household charges and hospital charges, and he has not implemented the commitment in the programme for Government. I am very much a believer in Fine Gael and all it has done, but this has gone wayward. I recommend the Move your Money campaign. This will be a thorn in the side of the Government. One has to stand up somewhere and I will stand up against the commerciality of the post office. I will suggest to An Post that it takes my advice, closes the doors, and does not put up the great retail manager who cannot write a sentence, and kick AIB and Ulster Bank out of every post office. It will bring An Post to the place where we now are.

Everybody has forgotten what the State owes, what we are being paid back by these banks, what these banks did to everybody and the greed they inflicted on every household and person in Ireland. It is not the way to go. This is certainly not the way to go if it is not, at the same time, paralleled with piloting Sparkassen and-or Kiwibank.

I thank the Acting Chairman, but I was the one who asked the Minister in.

It is hard to get banks out once they are in. We should pilot those other community banking structures at the same time and give the people choice. I am angry about this. I do not like it and it will not go away.

I welcome the Minister to the House to discuss this important issue. These statements are also an opportunity to have a debate the post office network itself. The Minister outlined the significant services provided by An Post. In many ways, the Minister's statement clarified many issues regarding An Post's activity. The view was that we went to the post office to get a stamp and that was it. The level of activity in An Post is something we need to be proud of. We should also discuss the immense services it provides.

An Post is going through a process of change. In recent weeks, post mistresses and postmasters received letters to state they have until 31 July to make a hard decision. It is a hard decision because they are an important part of the community. Some have been running post offices for decades, and now they must decide whether they will take the package on offer by 31 July or continue on the old contract with the possibility that their businesses will not survive. This is an issue for the network. This year will tell a great deal about how the network will look in the future. When we get information, such as that which the Minister has given the House, about the level of activity in post offices, it is important that we talk about it. We must also begin to talk about the fact that if we want a post office in the community we have to use it, and not just talk about it and campaign on it but physically use it. This will be something that all of us will have to deal with. We all must send the message - use it or, unfortunately, lose it. It is important that we get this message out there.

Expanding services is crucial, whether they relate to banking or motor tax. Work has been done on some of these issues and we must discuss them. We have to progress the motor tax issue at pace. The ability to renew motor tax in a post office would be a logical step. As other Senators have mentioned, a cohort in society does not have the ability to use the Internet. They do not renew motor tax online and will need an opportunity to go to a base to get their documentation. Senator Leyden mentioned the agricultural sector. The amazing aspect of the single farm payment system is that it is 100% online. Everything has to be done online to secure the basic payment. The post office is the obvious place for a hub that people can go to. This would be important for the rural dynamic to work.

With regard to the banking system, there is some activity regarding An Post, the banks and outside banks. We must acknowledge that it helps people who need to move money in and out of bank accounts. We are discussing today what the next system should be and what the real An Post system should be. We are discussing which system we should choose? I looked into the Kiwibank system. It has some exceptional merits. A lady working in my office from New Zealand never used the system. She is from an urban centre. She said the system is more for the rural parts of New Zealand.

Indeed. What we are saying is that we need to know this will be right for us. We have three options but we need to choose the right one. We are not going to rush into this. The action has to be right for the Irish people and the Irish psyche. The key point is that there is much activity in the An Post network. An awful lot of work needs to be done in the next few months. The real issue for me is that, from now until 31 July, many people will make some very hard decisions that affect their communities. We have to acknowledge that. The next step, when the decision is made, is to incorporate a system that will ensure that what is left of the network is sustainable.

I welcome the opportunity this debate affords us to examine the financial services landscape in Ireland and the need for An Post to provide services for a new generation of customers to whom traditional postal services appear irrelevant. There will be a great temptation to see the Kiwi post bank system, which we have heard about here, not just as a solution to the future threats faced by An Post but also as a solution to the dominance of the commercial banking system we are unnecessarily encumbered by in Ireland.

In the 2011 report by the commission of investigation into the banking sector in Ireland, Professor Peter Nyberg stated:

In explaining the simultaneity of the failures in Irish institutions, the Commission frequently found behaviour exhibiting bandwagon effects both between institutions (“herding”) and within them (“groupthink”), reinforced by a widespread international belief in the efficiency of financial markets. Based on this, the Report finally offers some lessons that could help avoid future similar occurrences in Ireland and elsewhere.

Herding and groupthink are still strongly in evidence in Irish banking, and a challenging and competitive new model is required here, not just another private commercial bank that disrupts for a while and then leaves again. What is needed is a bank that is culturally different, a bank that accompanies a loan to a business with real support and financial guidance throughout the term of that loan, that puts money into public works and, ultimately, that does not see profit maximisation as its reason for existence. Such banks do exist, as the Minister knows. They are publicly owned so they have no shareholders — only trustees — and they exist, therefore, to build up regional economies.

The Green Party supports an expansion of the financial services being offered by post offices, including banking services. Indeed, we see it as inevitable that such a development will happen. It would give customers the opportunity to take their business away from their current bank, based on return on savings, cost of loans and general banking charges. It also seems to us, however, that the institutions most impacted by such post banks and the additional competition they would bring to the market would be the credit unions rather than commercial banks. In this regard, a comprehensive analysis paper from the Department of Finance and the Central Bank would be a welcome addition to the Minister's proposal today.

The equally pressing issue of restructuring the banking landscape in this country must be restated. Postbanks are not equipped to become the regional economic driver that strong savings and loans banks in public ownership and operating as key lenders to SMEs in the €50,000 to €500,000 space, can be. Such a proposal to create a true third force in Irish banking will indeed challenge the commercial banks, which currently compete primarily to satisfy shareholders rather than stakeholders, and which continue to gorge on mortgage and business loan rates.

The regional public banking model would also enjoy the advantage of public ownership in perpetuity. Demutualisation will not happen in the event that they are established, or even in the event of the sale of shares to private institutions, as happened with Kiwibank in 2016. Profits will not be used to give shareholder dividends but, rather, will be put back into core capital and into public works, potentially for local authorities, which may act as the legal trustees of the institutions, as is the case with Germany's Sparkasse banks.

I understand that a very significant offer of technical support from the public banking network in Germany is currently on offer to the offices of the Minister for Rural and Community Development, Deputy Michael Ring, and the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty. This would facilitate the creation of a working group to engage on a detailed design for the establishment of six or eight regional banks around Ireland. These public institutions would be availing themselves of savings from the local and regional population to lend only to SMEs in the region, thereby capturing local wealth created and recycling it as future loans and interest on local savings. The potential for regional growth is evident, at a time when we are trying to grow our regions through the national development plan. Public banks would act as the perfect tool to make real the vision of more balanced growth around the country. I urge the Government to make a decision on this working group offer, and I hope it can support the public banking system while also delivering for the post offices.

I welcome the Minister to the House again for this long-overdue debate on the establishment of another tier in the Irish banking system. There has never been more reason to have a regionally-based, common-good oriented and publicly-mandated banking system. We need a banking system we can trust. If there is one thing we have learned from the crash and the financial abuses, it is that we need to be able to trust our banking system. I am a member of the finance committee, which deals with this subject very regularly. We saw how the tracker mortgage scandal has affected customers who entered into mortgage contracts in good faith with the banks. In my time dealing with this issue as a member of the committee, I was continually struck by the absolute disconnect between the banks and their customers and the disrespect shown to the latter. We see this even in the numbers reported to the Central Bank. The numbers increased all the time. Trying to get the truth out of the banks at the finance committee was nearly impossible. That is a serious problem we must address.

It is crazy, especially for people in rural areas. This is why we are talking about a rural banking system, although I acknowledge the proposal is for SMEs. That people from a rural area who have no public transport and who have to travel miles to the bank are told to come back the next day is absolutely bizarre. It is happening because it is being facilitated. I lost count of the number of times we were given guarantees that customers who had been identified as being affected by the tracker mortgage scandal would no longer be contacted or, indeed, harassed by those same banks looking for the payments, yet this continued in very many cases. Therefore, there is something seriously wrong with the current banking model.

On 2 May, my colleague, Deputy Doherty, asked when the interdepartmental report on public banking, which is based on the Sparkassen model, would be published. Let us remember that the publication of the report has already been delayed by several months. The Deputy was told that the report had been completed and it would be brought before the Government in the next few weeks. Has the Minister present, particularly as he sits at the Cabinet table, seen the report? When will it be published and made public?

The current threat to more than 390 post offices brings the issue of public banking into sharper focus. The postmasters at these branches have been offered a no win situation. Either they take the offer of a redundancy package of two years salary now or they try, as best they can, to keep their branches viable. The current option that has been presented is that the post office network must downsize and that the remaining branches in larger towns should open themselves up to the pillar banks and offer their services. It seems that Ulster Bank, AIB and Danske Bank are now being presented as the saviours of small post offices. The reason for discussing public banking is that we desperately need another banking model that is not open to the greed and incompetence that we saw those very same pillar banks destroy our economy. Why has the current offer been made to the postmasters? Surely if the Government was serious about setting up a second tier of banking it would strive to keep these branches open. There is also huge political will to get this done. I know that the previous Governor of the Central Bank favoured a second tier of banking. The current Government has a commitment to seriously examine the issue in the programme for Government. It is not as if we would venture into the unknown. There are many examples worldwide of public banking that uses or co-operates with existing structures, such as the postal network and delivering a second tier banking system.

I welcome Mr. Noel Kinahan from Irish Rural Link to the Gallery. I commend the work that Irish Rural Link has done on this matter. It is not like reading a blank sheet because proposals have been put forward. The German cohort met the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach again. I hope to be part of the delegation from the committee that will travel to Germany in September. On that occasion we will take a closer look at the German banking system and try to identify ways to replicate the model here. There are lots of answers and there are lots of actors involved. However, it is the Government's responsibility to have a banking system that meets the needs of its people.

Public banking is not solely focused on commercial lending and returns to its shareholders. It can play a huge role in lending to SMEs that are still a major employer in rural Ireland. In Ireland as much as 90% of lending to SMEs is controlled by two banks. I believe we cannot allow that situation to continue and we can no longer remain dependent on two pillar banks. The post office has a far greater presence in local communities when compared with pillar banks. The post office network could help re-establish the relationship between the borrower and lender. When one has a public community system like that one has a relationship, and such a relationship existed before the banks got greedy and reckless. It means that one could approach one's bank manager and bank personnel to discuss one's needs and plans with them.

One of the things that has disappeared from the pillar banks, especially in rural areas, is the relationship between a bank manager and his or her customers. I hear that refrain from members of the farming community all of the time. When these people approach banks now nobody understands the farming industry and how payments are lodged into and leave one's bank account at certain times of the year. As Senator Norris has said, in many rural branches one can no longer deal in cash, collect foreign currency or even set up an appointment with a member of staff.

In North Dakota and Germany there are public banking systems in place. I think a public banking system has been in place for 200 years in Germany. Such systems have proven to be really successful. Notwithstanding the fact that North Dakota has a population of only 750,000, as much as $1 billion has been returned to the state in North Dakota, which was given back to its citizens. In this country the banks have not had to pay corporation tax for decades. The money collected from such a tax could be spent on tackling the neglect of rural Ireland. If this country introduced a public banking system and the system was invested in rural Ireland then we could have a completely different approach thus leading to an entirely different outcome for our citizens.

The New Zealand model that we are considering today was established in 2002 yet already it has 20% of the overall banking market that caters for its population of 4.6 million. The New Zealand banking model could be replicated in this State. We have heard from representatives of the Kiwi (Post) Bank that the banking service was offered in order to break the back of the major Australian banks that held a huge market share in New Zealand yet they sent most of the profits back to Australia. The post office network needs something new. The public banking model holds the chance of keeping branches open and giving customers a choice in banking. We have talked for a long time about the fact that customers were mistreated by the major banks. I believe it is time to allow them to vote with their money and business and be allowed to embrace a new model of banking that has proved successful in many countries, including New Zealand. I firmly believe in a public banking system and Sinn Féin, as a party, has always believed in a public banking system but after the economic crash it is incredible. Let us not forget that only the Government can deliver and put impetus on introducing a public banking system.

I welcome the Minister to the House and I also welcome the Government's support and commitment to the post office network outlined.

I welcome any proposal that might bring new banking services and competition into Ireland. Clearly, we have a major problem with our banking system. We have a situation where we are clearly, with the pillar banks, running away from face-to-face interaction with customers. Everything is going online, which many people find challenging. They find that when they do not live in a large area, and even when they do, it is difficult to access the bank.

Others have mentioned the presence of Mr. Noel Kinahan in the Public Gallery. I, too, acknowledge his presence because Irish Rural Link has proposed to establish a new community bank in co-operation and partnership with Sparkassen community bank.

Like other speakers, I strongly support the initiative. Also, I was very determined that its representatives would come before the Oireachtas Joint Committee on Business, Enterprise and Innovation, as well as the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach because of one matter. The cost of doing business in this country, affordability and access to credit, which we have considered as a committee on many occasions is an issue that crops up repeatedly.

The Central Bank's SME report has produced serious information. The statistics clearly identify that there was an increase in the rejection rate of loan applications, which is up 13.9%, between March and September last year. To those who claim there is no problem I say that there is a serious problem. With the closure of branches it means that banks will become increasingly less involved in community and, therefore, less able to understand people's business. In the past, due to a culture of a bonus operated rewards system or common system, emphasis was placed on lending and not what one was lending for.

In terms of the post office, I echo many of the comments that have been made. Its importance to rural Ireland, and in my cases urban Ireland, cannot be overstated. We need to support them. It seems to me that the Kiwi Bank is certainly a model that should be considered, in terms of the post offices. I still want to see Sparkassen in this country too. As others have said, Sparkassen has a history of 200 years of supporting their communities, of a not-for-profit bank that has survived world wars and major depressions. They want their model to be adopted by this country. Unfortunately, the code of the bank does not allow them to set up and own other banks in other countries. People support the Sparkassen model and it trains people and helps to establish units. Of course, we also have our excellent credit unions.

I want to see an increasing number of facilities being made available through our post office network, which is critically important. If we lose them then we will never get them back and, believe me, we will rue that decision dearly. We have discussed rural Ireland and the supports that the Government has put in yet we know that shops are closing, the local doctor is leaving and an ever increasing number of services are operated centrally.

We talk about rural Ireland and the supports the Government have put in but we know that shops are closing, the local doctor is going and more and more services are being centralised. Some of that is unavoidable but the post office and its network is clearly a huge asset. It can still deliver for us and can deliver an alternative to the pillar banks that we have at the moment. The same is true of the Sparkassen model as well. Like others, I will be going over to see that in operation later this year. I wish to ask the Minister, as others have, where the report is. The response to a parliamentary question a month ago was that it is imminent but yet it is not to be seen. We cannot move this situation on until such time as we have that report. We could be on the brink of a revolution, akin to the revolution in agriculture when farmers came together to form co-operatives and then communities of co-operatives, after which those co-operatives ultimately became larger and now sell Irish products all over the world. They are a huge success story. The current Government and its predecessor have brought huge social change to Ireland with the marriage equality referendum, the end of corporal punishment against children by getting rid of the defence of reasonable chastisement and, more recently, by giving women rights over their bodies and their reproduction. Why can we not now have revolution and real change in our financial services-----

First, I must pay tribute to Senator Marie-Louise O'Donnell, who originated this extremely important debate. I have to say I cannot hide my distaste for the banks. They look to me like cockroaches, the only thing that would survive a nuclear explosion. We had a kind of financial nuclear explosion in this country. We thought everything was devastated and then out came the cockroaches again. They have absolutely not changed one whit. They are still behaving in the exactly the same way, that is, disgracefully. I will give a couple of examples. The Ireland Palestine Solidarity Campaign is a perfectly decent pacifist campaigning organisation. The Bank of Ireland has unilaterally closed its account at the instigation of the Israeli Government. None of us are safe if banks are allowed to get away with that. I understand they have refused the accounts of several diplomatic missions accredited to this country. How do we get on with banks like that? They should be put in their place. They are gagging to get at their emoluments, extra payments, bonuses and all the rest. These people are utterly shameless.

If one can be found. I was in the bank where I have had an account for 70 years, at the old home of the Parliament of Ireland at 2 College Green. I had not been there for a long time because the bank keeps pushing one out. There are no services. One cannot get this and one cannot do that. I was amazed at the things the bank will not allow one to do with one's own money. The bank will not cash a cheque over the counter. It is the customer's money. It will not send less than €3,000 or more than €5,000 or whatever is the rule. Every transaction one tries to make as an individual citizen is hammered. I have recently been buying a flat with some of the proceeds of the ten libel actions I took after the last presidential election.

Senators

The bank first thought it could transfer €100,000 a day but then it turned out to be only €20,000 a day. I eventually managed to overwhelm them and I managed to get it done. I went into the bank at 2 College Green the other day. It has an enormous banking hall, at least the size at least of this Chamber, with about 20 cashpoints, only to discover the bank had closed the foreign exchange department and had moved it into the main banking department. The bank also had only three people on duty. These unfortunate people were dealing with a catastrophe in the form of an enormous crowd that was snaking around all over the place. In my usual way, I demanded to see a manager but on this occasion, I must have been too feeble as they did not produce the manager but gave me a card to write a complaint. Consequently, I wrote all over the complaint card.

Those are the banks, which now want to get into the post offices. Oh dear. Why the hell did they close their branches in these areas? Now they want to get in again. They will not have to pay for the plant and equipment and all the rest of it. They are cockroaches, leeches or lizards. They are some peculiar form of humanoid insect life. I have to hand an internal memorandum saying that An Post is kicking off a campaign to promote banking services but it does not say who the service providers are. We know the providers will be AIB and the other one.

The banking services they offer are listed here. The memorandum refers to cash lodgement and withdrawals, credit card bill payments and more. Customers can ask at the counter for details. Does that mean they actually will be doing things in the former post offices, as they stagger on, in order that they will not have their own customers in their own branches? This is bloody ridiculous. It is absolute farce.

These are the banks who treat their customers with such utter contempt. These are the banks that were rescued and saved by the taxpayers. If one looks at the post offices, more than 300 of them are going to be closed down. In rural Ireland, post offices are closing all over the place. Banks have closed all over the place. Garda stations have closed all over the place. I would say we will soon have Roman Catholic churches closing all over the place. It does not give me any great comfort to say that. I am not antagonistic to the Roman Catholic Church at all but it is another community institution. It is where people met one another, where they socialised and exchanged information.

I hope so but I am not at all sure because things certainly have changed.

I will list the post offices that are closing down in three counties. In County Clare, they are Carrigaholt, Cooraclare, Craggagh, Cree, Doonbeg, Drumandoora, Feakle, Kilfenora, Kilmurry Mcmahon, Labasheeda, Lissycasey, Quilty and Whitegate.

I would advocate that we introduce something like theSparkasse bank or Kiwibank, which offers personal banking, home loans, personal loans, credit cards, everyday accounts and business banking accounts. Its services include business lending, international services and investments. There is a large range. Kiwibank is a publicly owned bank. It won the Sunday Star-Times-Cannex banking award in 2006 to 2010, inclusive, and 2012 for offering the best value across their range of products. It was also voted New Zealand's most trusted bank. There is a word. How many of us trust banks?

Suas leis na lámha, how many in this House trust banks? Not a single bloody one. We do not trust the banks. However, Kiwibank can be trusted. It is a mutual bank. It is a bank that is interested in the welfare of the citizen, and that is what we want.

At the time of the financial crisis, a great opportunity was created to reimagine the banking system. The mistake that was made was that governments all over the world, including here and in France, Germany, England and America, went in to rescue the financial services and let the people go and bugger themselves. Good government means looking after the welfare of the citizens.

The Minister is very welcome. I enjoyed Senator Norris's contribution. It was very humorous but also very serious.

Those of us who live in rural Ireland know we are definitely at a crossroads when it comes to our future. No one can deny that rural Ireland is in decline. Of that there is no doubt. We have discussed the decline of rural Ireland, but someone must call a halt, and Government needs to play an important part in this. The main pillar banks have turned their backs on rural Ireland. We all see this. They have left the people with no banking service. It is a case of "if you do not like it, tough". Is anyone calling the banks to account? Is anyone calling them in and telling them this is not good enough? It is time Government did so. I know banks will tell us that everything is moving online and that this and that can be done online. Yes, we all want to embrace new technologies - that goes without saying - but, for many of our citizens, broadband, as the Minister knows well, is non-existent, so doing anything online is also non-existent. Many of our citizens, particularly the elderly, find the whole concept of dealing with the Internet very challenging, and we should not turn our back on those people. Once upon a time, the banking system was based on the person; it was person-focused. Now the person is more of an obstacle than anything else for the banks. We should not lose that human contact. We are Irish. We are different from the rest of the world. We believe in human contact, we believe in friendship and we believe in community. If we believe in all these things, we need to put the infrastructure in place that ensures we sustain those qualities. These qualities are reflected in the post office network. Senator Reilly mentioned in his contribution the importance of this and how we would woe its decline in years to come if we allowed it to disappear off the landscape. Unless Government acts very swiftly, that is exactly what will happen: the post office network will decline.

Regarding the addition of services to communities in rural parts of our country, this banking model is definitely worth consideration. I compliment Senator Marie-Louise O'Donnell on her work in this area and Irish Rural Link for its work as well. Irish Rural Link made a presentation to Government in early 2017 and is awaiting the outcome of the Government's deliberations on that.

As I said, we are at a crossroads. It is over to the Minister and the Government to show us that rural Ireland is important and has a future. Part of this will involve putting the necessary infrastructure in place to ensure we have that future. Part of it involves adding more services to our already well-located post office network in order that our citizens will have contact with human beings as opposed to machines, where they can talk to the people behind the counters about issues they might have. This banking model, which has been hugely successful in Germany for over 200 years, to my mind, is a no-brainer and something we must embrace if we are serious about the future of rural Ireland.

There is only one minute left. Senator Lawlor has priority, but the difficulty I have is that the business is ordered and there is a debate on mental health next. I ask Senator Lawlor to be very brief.

We are here discussing the future of An Post and whether we can get community banking into the country. One idea in Ballymore Eustace, County Kildare, is that the post office offers the services of an online doctor. These kinds of ideas should be brought forward to the post offices.

We already have community banks here that need to be looked at. They are the credit unions. There is a credit union in every community. The credit unions need to be strengthened and given better-quality governance. I must admit, I like the idea of a central service provider. The credit unions should be adopting that. The Irish League of Credit Unions, ILCU, should provide that so the small credit unions can remain small credit unions in the community rather than having to amalgamate. Those are my two suggestions for the Minister.

Others have spoken about the challenge facing our post office network and the linked but separate challenges of the need for an alternative to commercial banks and the hugely disproportionate weight of commercial banks in Ireland, which is out of line with anything anywhere and dangerous for society. Senator Marie-Louise O'Donnell's excoriating and brilliant speech covered that, so I will make just two points.

In addressing the post office network problem, we need to ensure we do not accidentally fail to address the question of the alternatives. I am worried about something I have seen happen again and again. While the excellent Sparkassen and New Zealand models, for example, are very well developed proposals, there are talks about pilots - pilots in rural areas and pilots in urban areas - yet, at the same time as we are piloting good practice and doing reports on it, we are rolling out-----

-----bad practice. We are handing over the territory on which we hope these new community banks and public banking will take place. There is a choice here. We need alternatives, not simply new agents of the existing commercial banks. We need to ensure we do not take that space away.

I will say this because it is a direct question to the Minister. Is it not the case that those commercial banks do not pay taxes because they are writing them off? If we have new banking models, they will not only be profitable, they will also feed back into stakeholders and communities rather than shareholders. They will also be paying tax properly. At present, the existing heavily loaded banks do not even contribute at that base level. We should not be facilitating them. We should be giving that space to the new alternatives that are on the table. What is the plan to scale up from the pilots?

One can complement the other, but there are two very separate issues here that I wish to address. The first is the future of the post office network. We can talk about all the banking models in the world; if we do not have a network, we are going nowhere. Eighteen months ago, the chief executive of An Post came to me and told me that within 30 weeks An Post would run out of money and no longer be viable. There was no money to pay the staff. The issue of the local post office has been kicked down the road by Minister after Minister. The last time we had a new post office contract with postmasters in this country was in 1907. I gave a commitment to postmasters long before I was appointed Minister that I would try to have this issue brought to a head once and for all and plan out a clear future for the post office network. The solution that was presented to me 18 months ago was that we would reduce the postal deliveries to a three-days-a-week service in rural areas and that we would see vast swathes of rural Ireland without access to post offices.

The post office network is not viable without a sustainable An Post. There are 1,122 post offices throughout the country and my intention, despite some of what has been said today, is to try to maintain the maximum possible number. That is the objective of the company itself. There will be no compulsory closures - zero. Senator Leyden asked about viable post offices. A viable post office cannot close under this protocol unless it is taken up by another person, particularly another retailer in the community. Even when it comes to post offices that are not viable, if someone else within that community - a retailer, for example - is prepared to take on that service, it can continue in that community.

That is the factual situation. Senator Norris is wrong in regard to the post offices and communities that he listed earlier. Postmasters have been written to and they have been provided with an offer, but there is a clear procedure in place that has to be followed. An independent review process is in place and the joint committee will review that protocol after six months of operation to ensure we protect communities across the country.

An Post has four big strengths - its brand recognition, it is trusted by the public, its nationwide network and it had a van delivering five days a week. Now, of course, that has expanded and it is now delivering parcels six days a week to every single premises in Ireland. I welcome that expansion of its parcel service and hope to see it extended. The difficulty is that many postmasters and postmistresses believe that digital services are the end of the post office, whereas I believe the opposite and that it provides us with huge opportunities to provide additional, new services through the post office.

Some of those services are delivered on an agency basis. In my initial contribution I pointed to the bill payments service where over-the-counter services for Electric Ireland, Bord Gáis and so forth are provided through the post offices. I listed three banks where, again, an agency service is being provided to customers. That is an agency service and it was never planned to be a banking service provided by An Post. Nonetheless, An Post is providing financial services to 1.7 million customers on an annual basis and this provides the company with a huge opportunity. An Post is exploring a range of financial services and the banking counter service for the three banks is only a small aspect of this. That service has been in place for years but is not being utilised to the extent that it could be to bring additional income into the post office network. An Post is looking at additional banking services, including current account, loans and other credit facilities.

I want to pick up on a point made by Senator Anthony Lawlor. Everyone is talking about a German banking model, but Senators Lawlor and James Reilly were the only two who mentioned the other banking model - the credit union movement. I have extensive engagement with the credit union movement, which could provide far more services and which is anxious to lend to customers and to small businesses. This is an issue I have taken up directly with the Minister for Finance, namely, how can we unlock the capital and potential in respect of that ethos which is so robust across the country.

We need to look at every avenue. That is why we are so determined to expand digital services, particularly Government digital services, in order to provide an offline option for people in communities. This should not be just in regard to Government services but also services such as switcher.ie and bonkers.ie whereby people can save up to €300 on their electricity bills. People who are offline cannot avail of that today and the post office should, and must, be able to provide it.

Separately, we need a new banking model in this country. Whether it is the Kiwibank, An Post, credit union or Sparkassen model, I do not care, but we need another avenue. While this is something I am committed to, the House should not for one minute believe Kiwibank is the solution to protecting the post office network in Ireland. They are two separate issues. The Kiwibank website states:

The challenge

An outdated retail network experience that is expensive to run and doesn’t fit our modern customer needs for both postal services and for Kiwibank.

Our plan

Our plan is to deliver our customers' postal and banking services in ways that better meet their needs – this includes in-store and digitally.

It is happening in New Zealand, where they are trying to wind down their retail network. What I am trying to do as Minister is maintain, insofar as is humanly possible, the maximum number of post offices across the country. I believe the best, most fruitful and most productive way to do that is through delivering digital services offline in local communities through the Government.

I listened to the contributions made today. Bobby Kerr prepared a report a number of years ago. There were 226 Oireachtas Members at the time. How many of those 226 bothered to make a submission to Bobby Kerr on suggested futures for the post office? The answer is six - myself and five others. What I am talking about in regard to digital assist is having an offline service for Government online services, and this was in my submission to Bobby Kerr. As Minister, I am determined to follow through on that, engaging with ministerial colleagues and with the Office of Government Procurement. I intend to deliver on that because the postmasters, An Post and I believe that it is the best available opportunity today to bring cash flow into local post offices and maintain as many of those 1,122 post offices as is humanly possible.

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